Income distribution in Croatia:what do the household budget survey data tell us?

Danijel Nestić, Institute of Economics, Zagreb, Croatia

AbstractThe paper analyses income distribution in Croatia using the Household Budget Survey data. The results point to a mild increase in inequality during the 1998-2002 period. A non-linear increase in pensions in 2001 in favour of the better-off households has contributed to the rising inequality. In the meantime, other social transfers have become better targeted towards the poor suppressing overall inequality increase. Wages and salaries have become increasingly important and more unequally distributed sources of income. The income share of the poorest decile has shrunk due to its lower share in wages and pensions. The paper concludes with a proposal for introducing a panel survey of households in order to improve monitoring of poverty and inequality.